Momentum vs Non-Momentum

[walterw]

I want to add here a little word on momentum and how I am actually looking at it....

At this time I had decided to put all my concentration on "flip" trades wich are giving me some nice satisfactions... so in terms of my M counter trades I am taking a little vacation... I like to trade only ONE setup, go to the market with only ONE thing on my mind, so I can keep things as clear as posible and really focus on my ONLY setup...

Now Momentum considerations are playing a great roll on "flip" trades... the original idea of flip didnt take that into acct, as things evolved I really found it very beneficial to look only for flips that could have momentum potential...


My momentum readings are originally inspired on John Novak Nexgen work thru his "trend bands" that happen to be a very simple keltner exponential channell...

When we are inside the channell we are in non-momentum conditions (weaknes, cycle, congestion )


When we get outside the the channell we are in momentum conditions ( strength, trending )

On the graphic below I try to organize the keltner "momentum map" as inside non-momentum and outside centrifugal action momentum conditions...

Cant get more simple than that... Now the true potential of this is when you get a momentum build up outside keltner and you hold your trade until you get back inside keltner.... cheers Walter.

[cooter]

While there is centrifugal motion, there is also "gravity", or the tendency to regress toward the mean when momentum is diminishing.

Would this also be a correct interpretation of how things work here?

[walterw]

	Quote:	cooter
	While there is centrifugal motion, there is also "gravity", or the tendency to regress toward the mean when momentum is diminishing. Would this also be a correct interpretation of how things work here?

yes, that is called "refresh action" by Drummond theory and it is the normal pullbacks you can expect on the zig zag motion of market... thats where "flip" trys to make a competitive timing.... now, while you are still outside keltners we can consider it momentum, thought momentum will eventually dry and refreshing will happen all the way back to the mid band on a first instance, crossing the mid bands could suggest the starting of a reversal... or the stall of any trend on a coil...

This areas give you a map where you can expect certain outcomes... cheers Walter.

[Jakew]

The question of trading in momentum vs. non-momentum conditions, also known as trading in trending vs. sideways/whipsaw markets seems quite central to improving trading results. However there are few satisfying answers to this question. As mentioned above - indicators lag. Eye observations lag as well because only after some passage of time a trader is able to discern that he is in a whipsaw market... and still will not know when non-momentum conditions change into momentum conditions until after the fact. Channel breakouts are supposed to free those who use them from participating in a whipsaw market, but then again - there are false breakouts. Livermore and Seykota both advise to avoid whipsaw markets, but when I asked Seykota how it is posible to discern that a trend signal is not to be taken because there are whipsaw conditions now, he did not clarify the issue. John Carter in his book states that he is able to classify days of trading (and appriopriate methods to follow on such days) as trending and sideways, but I am not sure if he is really able to that before the open or only after some market action - or inaction.

I would say that trends and whispaws are largely unpredictable, but some gut feel based on experience and concentration may improve the odds in that matter a bit.

[walterw]

	Quote:	Jakew
	The question of trading in momentum vs. non-momentum conditions, also known as trading in trending vs. sideways/whipsaw markets seems quite central to improving trading results. However there are few satisfying answers to this question. As mentioned above - indicators lag. Eye observations lag as well because only after some passage of time a trader is able to discern that he is in a whipsaw market... and still will not know when non-momentum conditions change into momentum conditions until after the fact. Channel breakouts are supposed to free those who use them from participating in a whipsaw market, but then again - there are false breakouts. Livermore and Seykota both advise to avoid whipsaw markets, but when I asked Seykota how it is posible to discern that a trend signal is not to be taken because there are whipsaw conditions now, he did not clarify the issue. John Carter in his book states that he is able to classify days of trading (and appriopriate methods to follow on such days) as trending and sideways, but I am not sure if he is really able to that before the open or only after some market action - or inaction. I would say that trends and whispaws are largely unpredictable, but some gut feel based on experience and concentration may improve the odds in that matter a bit.

Jakew : nobody can tell whats gona happen, you only have areas with the most odds on your favor, then you have to manage small stops vs large trails... thats what this bussiness is all about... otherwise there is no way to place a trade because the market is completely relative on its output BUT it has clear areas where he normaly shows his cards... cheers Walter.

[BlowFish]

A little side question....Walter have you studied Drummonds stuff? Im not trading point and line but it is a remarkable body of work. The multiple time frame stuff is mind blowing.

[walterw]

	Quote:	BlowFish
	A little side question....Walter have you studied Drummonds stuff? Im not trading point and line but it is a remarkable body of work. The multiple time frame stuff is mind blowing.

Yes Fish, I did study the complete system, it is a very instructive material for the new trader and gives you an excellent base to build your own... His multiple time frame aproach helped me to open my mind in terms of "aerial views" of the trend... also from there on I started to play a lot with smaller time frames charts using indicators from larger time frames...

for example on "flip" I am using a 55T chart with indicators from 110 T and I also use a 11 T (never posted) for some specific timing purposes... all concepts from Drummond multitimeframe analisis... cheers Walter.

Pd : also push and refresh concepts...